Consumers are becoming less weary of credit, leading to an increase in demand for credit cards and home mortgages. A report from the British Banker’s Association is claiming that mortgage approvals, as well as credit card spending, are both on the rise.

While the increase in spending is good news for many consumer-driven businesses, the levels of borrowing are far from the dangerous dependence on credit observed during the credit bubble of 2006 and 2007. Lower interest rates have increased the level of borrowing from consumers, but only within a relatively safe margin.

Savers, on the other hand, are suffering from interest rates that are at their lowest point in several years. Economists have claimed that, while the current situation is far from the dangerous credit bubble of previous years, low interest rates and few incentives to save money could lead to a serious decline in savings.

The BBA report shows 42,990 mortgages for residential purchases were approved in September – an increase from the 38,834 mortgage applications approved in the previous month. The amount of mortgages approved in September is 7,000 higher than the six-month average, showing a significant increase in borrowing.

Despite the large increase in the number of borrowers, mortgage brokers claim that the level of confidence displayed by homebuyers is significantly lower than what we saw during the previous housing bubble. Consumers today tend to “play safe with credit” instead of borrowing to purchase property that’s beyond their means.

SPF Private Clients chief executive Mark Harris claims that borrowers are generally interested in “overpaying on their mortgages, taking advantage of low interest rates and paying down debt where they can.”

He believes that homeowners are reluctant to take on more borrowing while there is still uncertainty with regard the economic climate, despite growing confidence in the lending industry.

New figures indicate that mortgage rates are at their most affordable level since the late 1990s. On average, borrowers spend approximately 27 percent of their income on mortgage payments as of the second quarter of 2013. The figure is significantly below the average mortgage payment as a fraction of income for the last 30 years.

Halifax claims that a combination of affordable housing and reduced mortgage rates are allowing more Britons than ever to purchase their own property. The 27 percent average monthly payment is a significant decrease from mortgage payments during the peak of the housing market six years ago, and a great step for the country.

Analysts have pointed to the Funding for Lending Scheme as one of several reasons for the increase in the affordability of mortgages, claiming that it has assisted many lenders in offering lower mortgage rates. House prices have rose at a modest rate in the same time period, which has been compensated for by lower interest rates.

The biggest winners in the current housing market are believed to be the first-time homeowners, who currently have access to a far greater range of properties than at any point in the past six years. Despite this, key areas such as London have seen an increase in housing prices that has affected affordability for many first-time buyers.

Despite the excellent news for first-time buyers, some experts are warning that the current interest rates may not last. Mortgage brokers have recommended that any buyers interested in investing in property ‘lock in’ their rates with a fixed-rate loan before the market takes a step towards higher interest rates.

While mortgages have become more affordable across the entire nation, many cities have significantly higher housing costs than others. The average London resident is likely to spend 36 percent of their income on mortgage payments, while residents of Northern Ireland spend just 17 percent on average.

As the United States economy moves into a period of sensitive but steady recovery, economists are expressing their concerns about the low interest rates that the Fed has been supporting. Wall Street analysts and independent economists alike made claims that current interest rates will lead to long-term inflation.

The concerns appear to be recognised by the Federal Reserve, which is considering whether or not its current policy of reducing interest rates is worth continuing for the long term. Analysts believe that Federal Reserve Chairman Ben Bernanke will not introduce any new measures aimed at keeping interest rates as current lows.

Federal Reserve spokespeople have noted that the central bank plans to reduce its programme of purchasing government bonds. Analysts, such as Richard Yamarone, an economist at Argus Research, claim that the Fed’s current policy of injecting new money into the US economy is a ‘pretty dangerous game’ in the current climate.

The Federal Reserve is currently involved in a $1.2 trillion programme designed to reduce interest rates and increase lending. The bank’s efforts have largely worked, with mortgage lending and residential construction increasing throughout the US and economic activity slowly but steadily resuming.

Balancing that economic progress with a plan for warding off inflation is a sensitive and difficult matter, and one that many analysts believe the Fed may struggle to get right. A long-term increase in interest rates could reverse the progress made in the struggle to grow the US economy by discouraging lending and halting construction.

Aside from residential construction, several areas of the United States’ economy are beginning to show signs of a long-term recovery. The Commerce Department claims that orders for costly goods increased by 1.8 percent in May and consumer spending increased steadily over the last two quarters.

Recent statistics released by the FSA indicate that the housing market is really not faring as well as it appears to be on the surface. The whole problem resides in something termed an ‘interest only loan’ and these are not always in the best interest of the consumer, especially in the long run.

Despite the recent onslaught of negative economic news, it seems that there may be some hopes for optimism for some UK citizens seeking personal loans. Nationwide recently cut the rate on some of their personal loans to a shockingly low 6.2%, becoming the lowest rate offered in the United Kingdom.

Within the past year, fees associated with mortgages have risen by greater than 30% which is not such a great deal even in terms of low interest mortgages. In this same month last year, the average booking and application fees were £973 on a fixed rate mortgage, 2 year term. This year those same fees have jumped to more than £1,253.

In recent months we have been hearing how difficult it is for first-time homebuyers to qualify for a mortgage due to the high deposits required and the general lack of mortgage funding. What wasn’t made clear is just how high those deposits have risen.

Since the interest rates were cut in mid 2008, borrowers in the UK have lost approximately £49bn, according to latest figures released by BoE. On the bright side, borrowers have benefited by these reduced rates.

In a recent post released by the BBC, an effort was made to describe just exactly how the Bank of England sets interest rates. This is probably due to the overwhelming confusion amidst taxpayers as to exactly who sets the interest rates and why they are either raised, held or lowered.

As economies struggle to stabilise around the world, the Bank of England released its quarterly Inflation Report which has a grim outlook for the financial outlook in the UK. They further project that inflation will rapidly decline in the coming year.